Bombardier? “It's a story of corporate arrogance, greed and mismanagement by a family company that has multiple voting shares and doesn’t have to answer to an independent board or to the common shareholders”
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February 8, 2020 - by Jeanie Tran for bnnbloomberg.ca
- If it was an outside board of directors with adults on it, this probably would never have happened...
Times are tough for Bombardier Inc., which has been offloading assets at a seemingly furious pace in a bid for survival as it swims in a pool of more than US$10 billion in debt.
The Quebec-based plane-and-train maker is turning into, or has already become, just a skeleton of what it once was. Earlier this week, the Wall Street Journal reported the company is in talks to sell its private jet business to Textron Inc. It that deal pans out, it will follow a series of other divestments, including handing control of the CSeries to Airbus and a pending deal to sell its CRJ jet unit to Mitsubishi.
Read also : At Bombardier - Who Calls The Shots
Meanwhile, its rail business is also struggling, with a former executive of one of Canada's largest pension funds having said Bombardier's rail future comes down to a coin flip.
Below, portfolio managers weigh in on what's behind the once-mighty industrial titan's fall from grace, and what the future may hold.
David Baskin, president, Baskin Wealth Management
"It's a story of corporate arrogance, greed and mismanagement by a family company that has multiple voting shares and doesn't have to answer to an independent board or to the common shareholders.
The thing that has really killed them, and which I think when the company fails will be seen as the deathblow, is this decision to compete against Boeing and Airbus by creating the CSeries of jets. They bet the whole company on it and failed.
I can't imagine either the Canadian or the Quebec government coming up with more money in these circumstances. Maybe I'm wrong, but it's very hard for me to see the taxpayers putting up with more money going down the sinkhole."
Christine Poole, CEO and managing director, GlobeInvest Capital Management
"Bombardier's problems include an overleveraged balance sheet, continual bailouts and an inability to execute in its businesses and meet operational targets. The company is controlled by the Bombardier family...
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